Characteristics and Imperative of Ethics in Leadership and Financial Management

Reputation matters. Bad reputations can hurt, and even damage a name, brand, business or organization for decades. Think of some California cities and their struggles in recent years ranging from a dereliction of duty all the way to outright fraud. In some cases, weak willpower gave in to pressure or self-preservation, but the results were always the same: postponing difficulties or hard decisions for future generations. And when that time came (which in many cases is now), the fallout is nothing short of crisis. For private firms or publicly traded companies, the implications are felt in terms of earnings and the effects can be comprehensive. But these are merely the effects, not the cause of unethical behavior. Consequences can never motivate an individual, a group of leaders, or corporate culture to change for the better; only being motivated by the inherent value of a principal and adherence to it can inspire ethical actions.

Characteristic value and quality is what we know to be true about ethics. This is the deontological view that I mentioned in a previous post, Philosophy and Leadership. As one author put it, “laws, rules, principals or guidelines for personal ethics are rooted in inherent value” (Crisp, 2005). Thousands of years of human history, codified law, and social norms dictate the intrinsic worth of an ethic. The imperative demand of ethics is the moral ought in response to the rule, norm or dictate of an ethic or set of ethics. Personal guidance in ethics must spring from a “respect for moral law, not simply a fear of the consequences” (Sahakian and Sahakian, 1966). Once grounded in guiding principals, today’s leader need only ask when encountering a questionable or even a difficult decision, “how then do I respond?” Most answers will be self-obviating.

Unfortunately, the wide variance in ethical responses among managers and lack of “active practice in organizational ethics” (Velthouse & Kandogan, 2006) shows that simply trying to apply the grid of ethical behavior to someone not guided by these principals is nothing short of trying to drive a square peg in a round hole. And sadly, the wreckage of the last decade as an economy, and the last few years for local governments continues to underscore this reality, rather than affirm a resistance against it. The application to tomorrow’s executive manager is first and foremost to ratchet up the standards for themselves and others. In other words, a manager should realize that any separation of ethical action from character is a false one. Ethical behavior springs from character. It is a reflexive action, the imperative that works outward from characteristic quality. When building a team, ethical character should be the standard for the staff, within the limitations of knowing the background of an employee beforehand. Once a team is in place, ethical thinking and its implications should be core central, and constantly interacted with alongside other business decisions. In finance, most decisions and computations require elementary mathematics, not the sophisticated mathematics for managers, business calculus or even statistics, even though all of these are helpful for analytics. The real driver is having the guts to lead a team through difficult decisions, and having the character to back those decisions, come what may. Think about the next few years and consider the following for discussion and reflection. What are some unpopular decisions might you be faced with, but are absolutely necessary for real solutions and future solvency? How does the executive [in a public agency] diplomatically navigate a position where they are often trusted by neither staff nor elected officials?